Photo: Mint
Photo: Mint

Indian equities may extend losses; US bonds yields near record lows

  • Asian shares braced for more volatility
  • Pakistan on Wednesday said it will downgrade diplomatic ties with India

Indian stock markets are likely to be under pressure on Thursday amidst geo-political tension. Asian shares braced for more volatility on Thursday as eye-catching easings by central banks stoked fears of global recession, driving US yields to near-record lows and lifting gold past $1,500 for the first time since 2013.

Spot gold was last at $1,503.56 per ounce, having been as far as $1,510. The precious metal has surged 16% since May as the worsening Sino-US trade dispute sparked a rush to safe havens.

Early Thursday, Asian share markets were wobbly, as investors tried to find their footing after enduring a string of heavy losses. MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.03%, having shed 8% in less than two weeks.

Japan’s Nikkei inched up 0.1%, and away from seven-month lows. There was much relief that Wall Street had managed a late come back overnight, so that the Dow ended with a loss of just 0.09% having been down 500 points at one stage. The S&P 500 tacked on 0.08% and the Nasdaq 0.38%.

Back home, the Reserve Bank of India’s consumer confidence survey released on Wednesday reported a drop in consumer confidence in July as Indian households remained pessimistic about jobs and the general economic situation.

Anand Mahindra, chairman Mahindra & Mahindra (M&M), has urged the government to take a few short-term measures for reviving the automotive industry including revising the goods and services tax (GST) or removing the cess, and by rolling back the hike in road tax mandated by state governments.

InterGlobe Aviation Ltd’s independent director Anupam Khanna has questioned chairman M Damodaran’s style of functioning and stressed the importance of keeping shareholders and regulators informed of any uncertainty related to the ongoing feud between the founders of the airline.

Markets regulator, Securities and Exchange Board of India (Sebi), on Wednesday evening, tightened the norms for pledging of shares by promoters of listed companies.

Pakistan on Wednesday said it will downgrade diplomatic ties with India and suspend bilateral trade, asking India to withdraw its envoy to Pakistan in retaliation against the reorganization of Jammu and Kashmir and revocation of its special status.

Meanwhile, yields on US 30-year bonds dived as deep as 2.123%, not far from an all-time low of 2.089% set in 2016. Ten-year yields dropped further below three-month rates, an inversion that has reliably predicted recessions in the past.

The latest spasm began when central banks in New Zealand, India and Thailand surprised markets with aggressive easings, while the Philippines is expected to cut later Thursday.

The euro has also bounced to $1.1217, from a two-year trough of $1.1025, while the US dollar index has backtracked to 97.595, from a recent peak of 98.932. New Zealand’s dollar was still picking up the pieces after sliding as much as 2.6% on Wednesday when the country’s central bank slashed rates by a steep 50 basis points and flagged the risk of negative rates. The kiwi was huddled at $0.6447 having shed 1.3% for the week so far.

Oil prices were attempting a recovery as talk that Saudi Arabia was mulling options to halt crude’s descent helped offset a build in stockpiles and fears of slowing demand. Brent crude futures climbed $1.20 to $57.43, though that followed steep losses on Wednesday, while US crude rose $1.23 to $52.32 a barrel.

(Reuters contributed to the story)